Update — Aisle Nine for Muni Bond Funds
Kurt Brouwer July 27th, 2007
Here is a follow-up to my recent post on muni bond funds, Aisle Nine for Muni Bond Funds.
After reading the post, my colleague, Rita Lee, pointed out that by shopping around a bit, you can find superb funds such as Schroder Municipal Bond (SMBVX). She wrote:
David Baldt, who was a Morningstar Bond Fund Manager of the Year for 1997, has managed the Schroder Muni Bond Fund since inception. Baldt and his team have 65 combined years of fixed income investment experience; many have worked with Baldt since his days at Morgan Grenfell. Schroders is a global asset management company with $150 billion under management.
The fund began in December 2003, but previously Baldt ran the Scudder Municipal Bond Fund, which we also invested in until he left to join Schroders.
In the tax-exempt, fixed income world, Baldt and team stand out from those who believe in betting on interest rate movements or forecasting shifts on the yield curve. Baldt believes in paying attention to the bond issue itself – the amount of the issuance, indenture of the bond, repayment and call features, the market’s response or biases to/against the bond, and other obscure characteristics of the bond. Also importantly, the team asks, is the market pricing the bond right? For the past decade and more, they have been diligent at unearthing little know facts of the bonds they bought. Many a times, they found municipal bonds yielding higher than comparable maturity and quality corporates.
We think their strategy is unique and promising through any point of the market cycle. And, their results have been very good, both at Schroders and at Scudder, their previous firm.
David Baldt’s approach to buying muni bonds is a refreshing change to many tax-exempt funds. It is hard to fault Russel Kinnel’s admonition to just shop at Fidelity or Vanguar. However, if you do that you would miss out on a unique fund like Schroder Muni.
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The Schroder muni bond funds are being liquidated.